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York Timbers profits increases

Time of article published Sep 25, 2012

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York Timbers (YRK) has reported a strong set of results for the year ended June 2012 with diluted headline earnings per share improving to 42 cents per share from 16 cents a year ago.

Revenue rose to R1.11 billion from R959.1 million a year ago‚ while operating profit increased to R166.1 million from R161.9 million.

The success of the cost and resource optimisation strategy was reflected in an 8% increase in annual costs compared with the 13% increase in products brought to market. This resulted in a healthy operating profit margin of 15% for the year from 16% the previous year.

The company said it benefitted from operational efficiencies and continued to build on the prior years results. In addition‚ its debt was renegotiated during the year resulting in a more robust balance sheet and a significantly greater opportunity for York to explore future growth opportunities.

During the year‚ local suppliers struggled to meet industry demand which saw log prices remain high due to limited supply. These factors have pressurised solid wood processors operating margins‚ York said.

York‚ however‚ successfully realigned its processing operations to operate at profitable margins and expects to extract efficiencies from its operations.

Lumber and plywood volume sales increased as the housing shortage and the improvement of infrastructure is being addressed in Southern Africa. The Lumber Price Index increased by 3% during the financial year. SA is currently a net importer of both lumber and plywood products.

Despite the tough operating environment‚ York maintained its focus on increasing market share‚ resulting in lumber product volumes increasing by 14% and plywood volumes increased by 8%‚ it noted.

Looking ahead the group’s future prospects are positive as it anticipates that continued industry margin pressure will result in a consolidation of the industry‚ in which York is well positioned to participate.

“FY2013 will see us increase our focus on contractor accountability and responsibility as we align all our contractor standards to acceptable benchmarks. Our focus for the next financial year will be to continue to deliver on the seven pillars around which the restructuring was built‚ namely: cost optimisation‚ resource optimisation‚ maximisation of cash flow‚ sustained improvement of biological assets‚ maintaining market share‚ investment in human capital and implementation of the strategic growth plan for the business‚” the company concluded. - I-Net Bridge

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